Alexion CEO Received $30M in Compensation in 2013

April 23, 2014|By MARA LEE maralee@courant.com, The Hartford Courant

The CEO of Alexion, the Cheshire-based pharmaceutical company that makes the most expensive drug in the world, received $30.15 million in compensation last year, according to a federal filing Wednesday.

Alexion, which developed a biologic drug from CEO Dr. Leonard Bell's Yale research, only has one product so far: Soliris. The drug treats ultra-rare diseases and generally insurers pay more than $400,000 each year for one patient. Patients need it for the rest of their lives.

The vast majority of the money the executives received was in profits from excercising stock options and stocks vesting that had been given to them years earlier. Options are an agreement to buy stock at the price it cost the day the options were granted.

The Courant calculates executive pay by adding together salary, cash incentives or bonuses, the value of perks such as gym membership or moving expenses, and the value realized during the year from the exercise of options and the vesting of stock that were granted in earlier years.

Separately, Bell was given stock options in 2013 worth $4.27 million on the date they were given and restricted stock worth $5.50 million the time of the award. Their final value won't be known until they are exercised or vested.

Bell's bonus was $400,000 less than the $2.8 million he received in 2012, because the company had two setbacks during the year: a recall of some vials and an FDA warning letter for manufacturing quality control problems.

David Hallal, chief commercial officer at Alexion, received $19.2 million, with $17.8 million of it from vesting stock and the profit on stock options.

Martin Mackay, a new hire in May 2013 and the global head of research, received $397,000 in salary for the seven months he worked, a $450,000 cash incentive, and a $150,000 hiring bonus/relocation reimbursement.

Vikas Sinha, chief financial officer, received $18.9 million, $17.6 million of it from vesting stocks and the profits on stock options.

Saqib Islam, chief strategy and portfolio officer, who joined the company in April, was paid $585,000 in cash for the eight months of work and received $139,652 in relocation expenses.

In 2013, 88 percent of stockholders approved that year's pay packages in a nonbinding vote. The annual meeting will be held May 5 in New Haven this year, with an opportunity for a similar nonbinding vote.

The filing with the Securities and Exchange Commission that explained the executives' compensation gave many reasons for the large cash incentives — that moving operations to Ireland will have "very positive long-term financial benefits," for one. Ireland has a lower corporate tax rate than the United States.

But the fundamental reason for the big paydays is because the stock has appreciated so dramatically. As the filing noted, the stock price has increased 12-fold from January 1, 2007, to Dec. 31, 2013. If you bought $100 in Alexion stock on Dec. 31, 2008, it would be worth $734.37 on Dec. 31, 2013.